Greater infrastructure spending is welcome, but anti-free trade policies could lead to an economic downturn

It’s not been a week since Donald Trump was elected US president, and both the mainstream press and my corner of social media—an echo chamber, admittedly—are in full cry about the end of the world as we know it. The truth is that we just don’t know what will happen.

In his first major TV interview, Trump pulled back from the total repeal of Obamacare that he had said would be a priority, suggesting some key provisions could be retained. Among the possible cabinet appointees, including that for Treasury Secretary, are people with links to Wall Street and both Bush administrations, and dyed-in-the-wool Republican stalwarts. That’s pretty establishment by any standard.

For now, the impressions formed during the campaign are giving rise to dark thoughts, but we don’t know what a Trump presidency is going to look like and, probably, neither does he. On the basis of what he has said, is there any good news regarding the US economy?

Financial markets have changed compared with the initial aftermath of election night. They like the idea that Trump will propose to Congress (both houses will remain under Republican control) a large down payment on a $1trillion infrastructure programme and a big rise in military spending, plus the more widely advertised reductions in taxation of persons and companies.

Anthony Scaramucci, founder of SkyBridge Capital and a member of Trump’s economic advisory council, wrote in the Financial Times on Saturday: “Global economies are fighting deflation largely…

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Comments

PETER CLOSE

November 14, 2016 at 13:14

If interest is due on debt it doesn't make a huge difference to the economy as a whole whether that debt is public or private. But when that total debt is at unsustainable, near 100% of M3, then clearly something has to give. What can change matters for the better - provided it is done progressively and judiciously without over-promoting inflation - is the introduction of new sovereign money. Although it can be argued that all money is debt, in the case of new sovereign money the "debt" is simply a figure in a ledger recording its creation.

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